Retailers have specific insurance requirements that other businesses may or may not need or may need more or less of. For example, a retailer operating only in online spaces likely won’t need commercial property insurance and should instead focus on robust cyber insurance coverage. Here are some types of insurance coverage every clothing retailer needs.
1. A Business Owners Policy
Many businesses benefit immensely from business owners policies or BOPs. Insurance for clothing stores needs to cover a physical store, employees, the business’s liability, cyber insurance and workers’ compensation coverage. You may need to take out a separate policy for each type of coverage, but you can also choose to take out an umbrella policy or a BOP. These overarching policies allow you to bundle some or all of the coverage your business needs into one more affordable policy. If you operate your clothing store out of your home or online, check whether your business is eligible for BOP coverage.
2. Commercial Property Insurance
Unless you operate your business entirely online, you need commercial property insurance to safely and successfully run a clothing store. Commercial property insurance mainly covers your store’s physical location, whether you rent or own it, but you can also purchase property insurance for various types of equipment, vehicles and inventory if you need to. This type of policy is meant to protect your business’s assets and income against property loss due to damage, theft and disaster, among other things. You can use it to help your business recover losses incurred in such situations.
3. Retail Business Insurance
Retailers may choose to purchase insurance policies specific to their business type, such as retail business insurance. A retail business insurance policy provides small business owners with protection against a variety of risks intrinsically related to retail, such as shoplifting, customer information theft and forged checks. Retail business insurance policies are generally meant for small, independent businesses such as boutiques, but you should be able to purchase and customize a policy no matter the size of your business.
4. Liability Coverage
All businesses must have liability coverage to protect against damages and loss exposures. General liability insurance is related to personal injury and property damage that takes place on your business’s property. For retailers, this may include customers slipping and falling in a store or being injured by a piece of equipment, such as a broken clothing rack. Clothing retailers, like all retailers, should also purchase product liability coverage, which protects them against liability for injury or property damage related to products they sell.
5. Cyber Insurance
Cyber insurance coverage is increasingly important as more businesses participate in e-commerce. With cyber insurance, your business is covered for damages related to cybersecurity attacks such as hacking, network security attacks, malware and ransomware. Your cyber insurance policy may also offer liability coverage related to customer data and online interactions. Most businesses use their cyber insurance policies to recover from cybersecurity breaches. Your policy premium will depend on how much of your business you conduct online and the level of risk your business is associated with.
6. Business Interruption Coverage
Small, independent retailers can greatly benefit from business interruption (BI) coverage, a type of insurance policy that helps cover loss of income related to temporary business closure. You may use BI coverage to make loan or rent payments, pay employees and taxes or cover relocation or repair costs. Remember to check with your insurance provider about what is considered BI. While most policies cover situations such as renovations or relocations, they typically don’t cover natural disasters or pandemics.
Your business’s insurance coverage should meet your business’s unique needs. Think about what your business owns and rents and how your business operates. Then, compare that to the types of insurance coverage available to businesses. This should help you determine what coverage you need, which policies to choose and whether to bundle them in a BOP or umbrella policy.
